Income tax: Can a widow be taxed on ₹60 lakh gifted by her late husband? ITAT ruling offers clarity
A Pune woman has won a ₹60 lakh income tax dispute after the Income Tax Appellate Tribunal (ITAT) accepted her explanation that the cash deposited in her bank account had been gifted by her late husband for her and their two minor daughters. The tribunal directed the tax department to delete the entire addition, ruling that her explanation could not be rejected merely because her husband was no longer alive to confirm the gift.
In its order dated 13 October 2026, in the case of Surekha Subhash Parve vs ITO, Ward 5(4), Pune (ITA No. 3137/PUN/2025), the Pune bench of the ITAT set aside the decision of the National Faceless Appeal Centre (NFAC), which had upheld the tax officer's addition of ₹60 lakh as unexplained money under Section 69A of the Income Tax Act, 1961.
The ruling is relevant for families dealing with financial transactions and cash gifts between spouses, particularly when one spouse dies and the surviving family has to establish the source of money during income tax proceedings.
The dispute relates to the financial year 2015-16, corresponding to assessment year 2016-17. Information available with the income tax department showed that Parve had deposited ₹60.07 lakh in cash in her Bank of Maharashtra savings account during the year.
The department initiated reassessment proceedings after finding that she had not filed an income tax return for the relevant assessment year. The assessing officer issued notices seeking an explanation for the deposits. In response, Parve said that ₹60 lakh represented a gift from her husband, Subhash Ashruba Parve, who had subsequently died.
She explained that her husband had been handling the family's financial affairs and that the money was intended for her and their two minor daughters. She also said that she had difficulty gathering the supporting documents after his death on 17 March 2023.
The assessing officer, however, was not satisfied with the explanation. He noted that her bank account had total unexplained credits of ₹75 lakh, including ₹60 lakh in cash deposits and ₹15 lakh received through clearing cheques. In the absence of what he considered adequate documentary evidence establishing the source of the cash, he added ₹60 lakh to her taxable income under Section 69A.
The NFAC subsequently upheld the addition, noting that Parve had not furnished the necessary supporting documents during the first appeal proceedings.
Before the tribunal, Parve's counsel argued that the cash belonged to her late husband and had been gifted to her and their two daughters. The counsel also pointed out that she was a homemaker without an independent source of income and had not regularly filed income tax returns.
To substantiate her explanation, she submitted her bank statements showing the transactions, Form 26AS, her own affidavit, affidavits from her two daughters, her husband's death certificate and other supporting documents. She also provided the PAN details of her daughters and explained the circumstances surrounding the cash gift.
The tribunal observed that Parve had established the identity of the donor, her relationship with him and the PAN details of the donor. It also noted that her husband was no longer alive to provide a confirmation or affidavit regarding the gift.
The bench comprising Vice-President R.K. Panda and Judicial Member Astha Chandra held that the affidavits and confirmations submitted by the family had not been established to be false or untrue.
The tribunal also considered the Supreme Court's ruling in CIT vs Smt. P.K. Noorjahan (1999), which clarified that additions under deeming provisions such as Section 69A are not automatic. The word 'may' in the provision gives tax authorities discretion, which must be exercised after considering the facts and circumstances of each case.
Accepting the widow's explanation, the tribunal concluded that the source of the cash deposits could not simply be rejected because the donor had died. It directed the assessing officer to delete the entire ₹60 lakh addition and allowed her appeal.
Under the income tax provisions applicable to assessment year 2016-17, gifts received from a spouse were not taxable under Section 56(2)(vii), as a spouse is treated as a relative for this purpose.
However, this exemption does not automatically protect every cash deposit from tax scrutiny. Taxpayers may still be required to establish the nature and source of money when the assessing officer questions unexplained deposits under Section 69A.
Under the current tax framework, Section 56(2)(x) also exempts gifts received from specified relatives, including a spouse. The exemption from tax on gifts and the requirement to explain the source of money are separate issues.
The ITAT's decision therefore highlights the importance of maintaining supporting documents for family financial transactions. Bank statements, gift declarations, affidavits, donor identification details and other evidence establishing the circumstances of a transfer can help taxpayers defend their claims during scrutiny.
The ruling is based on the specific facts and evidence presented in this case and does not mean that every unexplained cash deposit claimed as a gift from a spouse will automatically be accepted.
Kirti jha
Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.
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